Strong growth in Europe for Pernod Ricard helped mitigate the impact of sharply falling sales in China in the first half of its financial year, as overall performance for the wine and spirits business improved in Q2.
Sales in Europe grew 4% in the half year. Overall sales increased 2% in the second quarter, against -1% in Q1. Due to a “highly unfavourable forex impact”, reported net sales growth was -7% in H1 (€4.6bn).
Sales fell 18% in China. The Americas returned to growth (+3%) following a strong second quarter. Sales in Asia excluding China grew 2% in the half year.
Net sales of the top 14 brands fell 1% with volumes unchanged. Strongest performers by sales include Jameson (+16%), Glenlivet (+10%) and Ricard (+9). Sales of its biggest brand, Absolut, grew 1% while its number two and number three brands, Chivas Regal and Ballantine’s, both fell 4%.
Net profit from recurring operations declined -3%. Excluding forex impact, it grew +6%.
Operating margin improved (+34bps), thanks to “strict control of resources”, leading to organic growth in profit from recurring operations of +2% at €1.4bn.
Chief executive Pierre Pringuet said: “We remain confident in the medium and long-term potential of China but we anticipate difficulties to persist for the full financial year. We want to prioritise the group’s future sales growth through a sound commercial policy and an appropriate level of investment.
“As a result, we are issuing new guidance for FY 2013/14: organic growth in profit from recurring operations between +1% and +3%.”
The company also announced the launch of “AllegroBallantine’s”, a project aimed at delivering further operational efficiency.
